Energy Finance 2012

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The Energy Finance Conference 2012, sponsored by the Department of Industrial Economics and Technology Management of the Norwegian University of Science and Technology, Trondheim, took place on the 4th and 5th of October at the Rica Nidelven Hotel. This Conference was a spectacular success, one of the best I have ever attended. Congratulations go to Conference Chairman Prof. Sjur Westgaard, Conference Vice Chairman Prof. Stein-Erik Fleten, and Secretary of the Steering Committee Postdoctoral Fellow Peter Molnar.

The reason for this conference’s success, first and foremost, is the very unusual extent of cooperation between industry and the academy. As some of you readers may know I have worked “both sides of the street” over many years. (See my CV for the somnolence-inducing details.) During this time I have attended many industry conferences and many academic conferences, and I am here to verify that there is a very small intersection of interests. It may be that neither side really trusts the other for making significant contributions. I have heard derisive commentary about all those “ivory-tower eggheads” as well as those “ignorant practitioners” who don’t know how to use the tools they are given by the insightful academics. The conversation usually stops when I identify myself as belonging to “those others.”

On the other hand, my choice for an explanation is simple ignorance on both sides as to the many rewards which can arrive by taking the time to understand the opposite number’s point of view. Industry people can learn much by studying the basic constructs of the academics. These include econometric models, spatial statistics, and relational concepts of variable dependence, just to name three. Such basics are well within the reach of a liberal arts educated professional, if not some of the more arcane ideas with special applications. Academics can profit much from the inspiration of knowing how the “real world works” for the inspiration to develop new mathematical methods to meet the challenges.

Therefore, I must now cite the Scientific Committee of this Conference, Professors Fred Espen Benth of the University of Oslo, Derek Bunn of London Business School, Rüdiger Kiesel of the University of Duisburg–Essen, Gudbrand Lien of Lillehammer University College, and Rafal Weron of Wrocław University of Technology. These five Committeemen provided a well-performed service of bringing together many fine presentations, both for plenary delivery and for logically-grouped breakout sessions. A high fraction 47 of the 86 participants gave talks (55%), unusual for any conference. About equally represented at the lectern were industry speakers, academic professionals, and masters degree and Ph.D. students.

The talk I gave was based on the paper: Benth, Fred Espen and Paul C. Kettler, Dynamic copula models for the spark spread, March 2011, Quant. Finance 11 (3), 407–421. Slides for the talk are available here: Slides. A preprint version of the paper itself is available here: Paper.

Lastly I make a note of my own group from the Centre of Mathematics for Applications in attendance at the Conference. Our group of eight (no, not that one) consisted of Fred Espen Benth, Sara Blanco, Heiðar Eyjólfsson, Rüdiger Kiesel, Jukka Lempa, Maren Schmeck, Imran Taib, and self. We had a great time.

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